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National Insurance Contributions
Newsletter issue - November 2014
It seems that HMRC is trying to gather every penny in tax and national insurance contributions (NIC), from every possible source. Recently it has been demanding payment of class 2 NICs from landlords and investors in investment partnerships. If you get a bill for back-dated class 2 NICs should you pay it?
The annual class 2 NI liability is a relatively small amount (£143 for 2014/15), but it can provide you with an entitlement to the UK state pension. At least ten full years of NI contributions will be required to receive any state pension if you reach state pension age (SPA) after 5 April 2016. Note that SPA is gradually being increased up from age 65. If you are currently aged under 54 you will not become entitled to your state pension until you reach at least 67.
If your main source of income is rents or investments, paying class 2 NICs for past tax years could provide you with some state pension entitlement. On the other hand if your main income is from an employment, you are probably paying sufficient class 1 NICs in each tax year to gain your pension entitlement. We can help you decide what is best for your circumstances.
Chartered Accountants in Richmond, Surrey, The Hughes Consultancy provides a wide range of business, tax, financial planning and business growth services. All of our clients benefit from competitive pricing, our expertise, and unlimited support. Contact us today to learn how we can support you.